The Impact of People and Processes on Forecast Error in S&OP
Research Report #18

It is widely recognized that success in S&OP depends on people, process and technology. But what kind of people, process and technology do we need? To answer this question, we data mined the responses to an Institute of Business Forecasting and Planning (IBF) survey to ascribe a forecast error value to specific activities and processes performed in the S&OP process. Once we understand the effect of a particular attribute/activity on forecast accuracy, we can make positive changes to reduce forecast error to better service the business. Respondents were from North American countries (Canada, Mexico and United States) and all were involved directly or indirectly in demand planning and forecasting. The total number of respondents was 863.

Since success of the process element depends very much on forecasting error, we evaluated the effectiveness of each attribute/activity on the basis of error—the lower, the better.

By Chaman L. Jain
Tobin College of Business | St. John's University

Table of contents

PEOPLE


FORECASTING ERROR BASED ON:
  1. HIGHEST DEGREE EARNED
  2. ACADEMIC BACKGROUND
  3. PROFESSIONAL BACKGROUND
  4. AVERAGE TENURE AS A FORECASTER

PROCESS


FORECASTING ERROR BASED ON:
  1. WHERE THE FORECASTING FUNCTION RESIDES
  2. ONE NUMBER VS. MULTIPLE FORECASTS
  3. THE APPROACH USED
  4. FREQUENCY OF CONSENSUS MEETINGS
  5. AGE OF THE S&OP PROCESS
  6. OVERRIDE STATISTICAL FORECASTS
  7. TRAINING PROGRAM IN PLACE
  8. TYPE OF DATA USED
  9. MONTHS OF DATA USED
  10. THE MODEL USED
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